The in­di­geni­sa­tion route

In do­ing the de­mar­ca­tion of who does what in­clud­ing over­laps, a road map is es­sen­tial to be clear what tech­nolo­gies we need in what time frame, par­tic­u­larly to bridge the asym­me­try vis-à-vis our ad­ver­saries, par­tic­u­larly China.

SP's MAI - - FRONT PAGE - LT GEN­ERAL (RETD) P.C. KA­TOCH

In a re­cent sem­i­nar on ‘Self Re­liance in Land Sys­tems Through In­di­geni­sa­tion – The Fu­ture Per­spec­tive’ or­gan­ised by a pri­mary think tank in New Delhi, the chief guest mooted the idea that the sem­i­nar must pro­vide a plat­form to the de­fence in­dus­try to project their ca­pa­bil­i­ties and gain in­sight into the poli­cies and pro­ce­dures on in­di­geni­sa­tion as well as pro­vide an op­por­tu­nity to both the Army and the in­dus­try to build an en­dur­ing part­ner­ship which will be in­stru­men­tal in ad­dress­ing the is­sues re­lated to in­di­geni­sa­tion of mil­i­tary equip­ment.

The sem­i­nar showed there is no dearth of com­pelling thoughts and ideas which came up dur­ing the tech­ni­cal ses­sions that gave a pos­i­tive di­rec­tion to the in­dus­try houses in plan­ning their fu­ture in­vest­ments and the pol­icy-mak­ers in fram­ing pol­icy guide­lines to keep all the stake­hold­ers on the same page and fo­cused to­wards the com­mon goal. What is sig­nif­i­cant to note is that this was not the first such sem­i­nar on the is­sue that many of this type have been held over the years and yet we con­tinue to im­port over 80 per cent of our de­fence needs.

This de­spite crores of ru­pees ex­pended on the De­fence Re­search and De­vel­op­ment Or­gan­i­sa­tion (DRDO) and the De­fence Pub­lic Sec­tor Un­der­tak­ings (DPSUs) sim­ply be­cause our R&D is not fo­cused, our poli­cies and pro­ce­dures are not stream­lined to drive and fast-track in­di­geni­sa­tion and are poorly ex­e­cuted, we have not op­ti­mised pub­lic-pri­vate part­ner­ship in­clud­ing small and medium en­ter­prises (SMEs) and lack or­gan­i­sa­tional struc­tures to do so, we have not lever­aged ICT and mod­ern man­u­fac­tur­ing pro­cesses to ac­cel­er­ate in­di­geni­sa­tion, we do not have a road map to leapfrog tech­nol­ogy, we do not cap­i­talise upon in­no­va­tive­ness pri­vate in­dus­try and the academia, and we con­tinue to re-in­vent the wheel, plus ac­cred­ited rea­sons.

An­other over­bear­ing rea­son is stag­na­tion in the pat­tern of func­tion­ing that has set in over the past decade, which re­sists change for many rea­sons, cor­rup­tion in­cluded in­di­cated by Haschke turn­ing ap­proval in the Au­gus­taWest­land He­li­copter scam – a first time ex­posé that would per­haps help heal the sys­tem. The good news is that with the change of govern­ment in the off­ing, the new setup will likely pro­vide the much de­layed boost to in­di­geni­sa­tion.

Why 67 years af­ter in­de­pen­dence, DRDO of­fi­cials ad­mit they only have “pock­ets of ex­cel­lence” is no mys­tery. When De­fence Min­is­ter A.K. Antony or­dered the CAG to do a se­cret au­dit of DRDO last year, the high­lights of the re­port were gloomy to say the least, ma­jor ones be­ing: one, DRDO has been de­vel­op­ing equip­ment which is ei­ther sub­stan­dard or have ex­tended dead­lines and additional bud­gets; two, many projects have no govern­ment ap­proval – only 10 per cent projects have the Min­istry of De­fence (MoD) clear­ance; three, cor­rup­tion and nepo­tism ex­ists in the up­per ech­e­lons; four, there is an ex­o­dus of qual­i­fied sci­en­tists. DRDO chal­lenged the find­ings but MoD took cog­ni­sance and or­dered re­view of the ap­proval pro­cesses.

Ad­di­tion­ally, the Con­troller Gen­eral De­fence Ac­counts (CGDA) au­dit find­ings raise se­ri­ous ques­tions on the DRDO ca­pa­bil­ity de­spite an­nual budget of ` 10,610 crore (2013-14).

The au­dit notes that in sev­eral cases, DRDO bought equip­ment from other com­pa­nies af­ter spend­ing crores on R&D. For in­stance, the CGDA found that af­ter spend­ing two years and ` 29.96 crore to de­velop satel­lite sig­nal mon­i­tor­ing, DRDO ul­ti­mately bought the same from a pub­lic sec­tor un­der­tak­ing on a sin­gle ten­der ba­sis for ` 24.50 crore in April 2011.

When commercial off-the-shelf (COTS) tech­nolo­gies are avail­able, DRDO still spends crores of ru­pee on rein­vent­ing the wheel. For ex­am­ple, DRDO spent

` 6.85 crore to de­velop ex­plo­sive de­tec­tors, which were of­fered to the army for ` 30 lakh each while COTS ver­sions were avail­able for ` 9.8 lakh apiece in­clud­ing re­pair and main­te­nance. The CGDA re­port crit­i­cised the ‘joint de­vel­op­ment’ tech­nol­ogy ini­tia­tive of DRDO, call­ing it “im­port of older, for­eign tech­nol­ogy un­der the dis­guise of joint de­vel­op­ment.” The CGDA ac­cused DRDO of pro­mot­ing for­eign firms with­out the manda­tory for­mal ToT agree­ment. In an ear­lier CAG re­port in 2011-12, DRDO was found spend­ing crores on ran­dom re­search projects and out of 55 high pri­or­ity projects based on user-re­quire­ments, only 13 had gone into pro­duc­tion.

A mod­u­lar bridge be­ing de­vel­oped for the army was shelved in 2010, af­ter eight years of ex­per­i­ments and spend­ing ` 21.46 crore. Six months later, ` 13.25 crore was sanc­tioned for an­other mod­u­lar bridge project. The ini­tia­tive to pro­duce next gen­er­a­tion laser weapons was closed down within a month af­ter equip­ment was pro­cured. So forth and so on the story re­mains the same but it also in­di­cates lack of

fo­cus and mon­i­tor­ing by the govern­ment. The mil­i­tary as the user oft has to put up with sub-stan­dard prod­ucts de­spite time de­lays. Many prod­ucts are not any­where close to their for­eign coun­ter­parts, for ex­am­ple, night vi­sion equip­ment de­spite im­port of in­frared (IR) tubes. The fact that the mil­i­tary and the Cen­tral Armed Po­lice Force (CAPF) too have to im­port small arms is a mat­ter of shame.

So where do we go from here? The first re­quire­ment is to re­or­gan­ise the MoD and in this case the Depart­ment of De­fence Pro­duc­tion (DoPD). This is nec­es­sary to break the time wrap in which the sys­tem is caught up in, plus the cor­rup­tion. This was ex­plic­itly ex­plained by L&T CEO Manib­hai Naik in a let­ter to Prime Min­is­ter Man­mo­han Singh in 2011 say­ing, “De­fence Pro­duc­tion (MoD) Joint Sec­re­taries and Sec­re­taries of De­fence Min­istry are on the Boards of all PSUs – sick­est of sick units you can think of who can­not take out one con­ven­tional sub­ma­rine in 15 years now with the re­sult that the gap is widen­ing be­tween us and China and bulk of the time we re­sort to im­ports out of no choice. The de­fence in­dus­try which could have re­ally flow­ered around very high tech­no­log­i­cal de­vel­op­ment and taken In­dia to the next and next level of tech­no­log­i­cal achieve­ment and ex­cel­lence is not hap­pen­ing.“There is merit in what he says. Def­i­nitely in­duc­tion of serv­ing mil­i­tary of­fi­cers, es­pe­cially as De­fence Sec­re­tary, Sec­re­tary De­fence Pro­duc­tion and Sec­re­tary De­fence (Fi­nance) is needed to break the cur­rent log­jam.

Next is the need for a thor­ough re­view of the func­tion­ing and ca­pa­bil­i­ties of the DRDO, DPSUs and Ord­nance Fac­to­ries (OFs), par­tic­u­larly what they should de­velop in­di­vid­u­ally, what should be the JVs and what de­fence prod­ucts should be un­der­taken ex­clu­sively through in­di­geni­sa­tion, which in turn would per­mit cut­ting down some of these flabby govern­ment or­gan­i­sa­tions run­ning con­trary to worth­while costs ben­e­fit. In do­ing the de­mar­ca­tion of who does what in­clud­ing over­laps, a roadmap is es­sen­tial to be clear what tech­nolo­gies we need in what time frame, par­tic­u­larly to bridge the asym­me­try vis-à-vis our ad­ver­saries, par­tic­u­larly China. These would in­clude smart, stealth and nan­otech­nolo­gies, di­rected en­ergy weapons (DEWs), strate­gic air and theatre mis­sile de­fence, hy­per­sonic plat­forms, and tech­nolo­gies for space and cy­berspace com­bat, ra­di­a­tion com­bat, ro­botic com­bat, be­sides im­proved C4I2SR and NCW ca­pa­bil­i­ties.

Con­sid­er­ing the state of our R&D and ad­vances world­wide, JVs are ac­tu­ally the route to leapfrog tech­nol­ogy, aside from re­verse en­gi­neer­ing, lat­ter be­ing freely prac­tised by coun­tries like China, Pak­istan and North Korea. In this con­text de­fence off­sets too play an im­por­tant part. Open­ing of a Fa­cil­i­ta­tion Cell by the De­fence Off­sets Man­age­ment Wing (DOMW) in a civil area for easy ac­cess has been a good step. How­ever, it needs to be re­mem­bered that the DOMW was pre­ceded by the De­fence Off­set Fa­cil­i­ta­tion Agency (DOFA) that was es­tab­lished in 2006 but had to be shut down as it could not deliver upon what was ex­pected. At the same time, for­eign com­pa­nies which in­vest con­sid­er­ably in R&D may not be com­fort­able in shar­ing those high-end crit­i­cal tech­nolo­gies with In­dia at a mul­ti­plier value level. There are no spe­cific in­cen­tives to share high-end tech­nolo­gies and for­eign OEMs can get the ben­e­fit of mul­ti­pli­ers by shar­ing com­par­a­tively non-crit­i­cal tech­nolo­gies for the same mul­ti­plier value.

Per­haps there is need to pro­vide higher mul­ti­plier val­ues to ex­tremely crit­i­cal tech­nolo­gies re­quired by DRDO in or­der to at­tract for­eign ven­dors. It may be help­ful if MoD as­signs mul­ti­plier val­ues on a case to case ba­sis, based on crit­i­cal­ity, im­por­tance, re­quire­ment and ur­gency; DOMW should en­sure there is no am­bi­gu­ity in the process in­clud­ing through a fully au­to­mated sys­tem that will mon­i­tor, ac­count for, and au­dit off­sets in real time, which should be prefer­ably web based; and, DOMW must pro­vide ac­cu­rate and de­tailed in­for­ma­tion about the sta­tus of off­set con­tracts and the tech­nol­ogy/ca­pa­bil­ity re­ceived from each con­tract to help stake- hold­ers un­der­take cost-ben­e­fit anal­y­sis, fa­cil­i­tat­ing mid-course cor­rec­tions.

Then is the pro­cure­ment process, com­pli­cated be­yond imag­i­na­tion. Trefor Moss quot­ing the Army Chief wrote in The Diplo­mat on March 25, 2012, say­ing, “The pro­cure­ment game is a ver­sion of snakes and lad­ders where there is no lad­der but only snakes, and if the snakes bite you some­where, the whole thing comes back to zero.” The hur­dles in ab­sorb­ing for­eign tech­nol­ogy are too many even if the for­eign ven­dor is ea­ger for the JV and ToT. Take the case of the US, where US tech­nol­ogy and ex­ports con­trol ar­eas are be­ing looked at as in the case of clos­est al­lies of US; for the US sys­tem to op­er­ate on a timescale con­sis­tent with the needs of In­dia.

How­ever, it is equally im­por­tant for us to in­tro­spect es­pe­cially since we failed to at­tract the for­eign di­rect in­vest­ment (FDI) in de­fence de­spite hik­ing the limit from 26 to 49 per cent. For that mat­ter, lit­tle at­ten­tion has been given to why our own pri­vate in­dus­try does not find the de­fence sec­tor at­trac­tive enough or rather their par­tic­i­pa­tion is far less than de­sired. For a JV with a US firm, is­sue of RFI with usual re­sponse time of three months for ‘Buy and Make’ projects would re­quire con­cerned US firm to ob­tain per­mis­sion from the US Govern­ment ev­ery time for ex­port. If the equip­ment or sys­tem is it­self a JV within the US, then each of these firms too have to ob­tain US Govern­ment ap­proval for ex­port of spe­cific tech­nol­ogy; some­thing that may take up to 12 months or more. Ad­di­tion­ally, be­fore the JV is es­tab­lished with the In­dian firm, what items and in what spe­cific quan­ti­ties have to be iden­ti­fied and ap­plied to the US Govern­ment by the Govern­ment of In­dia (GoI) since the said items can only come through the for­eign mil­li­tary sales (FMS) route on a govern­ment-to-govern­ment ba­sis. On bal­ance, if all these com­pli­ca­tions are not ad­dressed, Indo-US JVs for a ‘Buy and Make’ project will re­main mis­nomer.

De­spite all the an­nual hoopla of sim­pli­fy­ing the De­fence pro­cure­ment Pro­ce­dure (DPP), the changes have been largely cos­metic, largely due to vested in­ter­ests. Other­wise there is no rea­son why re­view of the DPP is done in-house by MoD. The fact that we have not been able to suf­fi­ciently at­tract our own pri­vate in­dus­try into the de­fence sec­tor should lead us to fo­cus why this is hap­pen­ing. The fact is that there are just too many dis­in­cen­tives: first, there is lit­tle mon­e­tary in­cen­tive for R&D; sec­ond, there is no change to the no­cost-no-com­mit­ment trial sys­tem; third, no as­sur­ance of sub­se­quent phase even when un­der­tak­ing cur­rent phase; fourth, com­pli­cated, costly and time-con­sum­ing ten­der­ing, cus­tom clear­ances (as ap­pli­ca­ble), mul­ti­ple demon­stra­tions in var­ied ter­rain and places, etc; fifth, cor­rup­tion – bribes at var­i­ous lev­els; sixth, de­spite costs, time and ef­forts, pos­si­bil­ity of ter­mi­na­tion and black­list­ing even through anony­mous let­ter; sev­enth, lack of trans­parency and the like. Log­i­cally, re­view of the DPP should be done by a panel fully in­te­grat­ing the pri­vate in­dus­try and the stake­hold­ers or still bet­ter, by an in­de­pen­dent body rep­re­sented by all con­cerned. To this end, es­tab­lish­ment of such an in­de­pen­dent and all en­com­pass­ing ex­pert body can solve the com­pli­cated jig­saw of not only the DPP, but es­tab­lish­ment of JVs, op­ti­mis­ing de­fence off­sets, road map and leapfrog­ging of tech­nol­ogy, plus rec­om­mend­ing di­vi­sion of re­spon­si­bil­i­ties be­tween the de­fence in­dus­trial com­lex; DRDO, DPSUs, OFs and pri­vate in­dus­try.

For in­di­geni­sa­tion to suc­ceed, we must pro­vide a level-play­ing field to the pri­vate in­dus­try and op­ti­mise their po­ten­tial as well. We can­not as­pire to be a global or re­gional power with­out be­ing sub­stan­tively self-re­liant in de­fence pro­duc­tion. Our de­fence pro­cure­ment must aim to trans­form our de­fence-in­dus­trial base to be­come an ac­tive hub for state-of-the-art de­fence ex­ports be­sides mak­ing In­dia self-re­liant in de­fence needs on an up­ward grad­u­at­ing scale. The DRDO must con­cen­trate its ef­forts on de­vel­op­ing crit­i­cal cut­tingedge tech­nolo­gies that strate­gic part­ners are un­likely to share.

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